Former pensions minister Ros Altmann has urged the government to stop “wasting” council tax on pension contributions and use the money for social care instead.
Altmann was pensions minister from 2015 to 2016 within David Cameron’s cabinet, and is now a Baroness who sits in the House of Lords.
She pointed out that the Local Government Pension Scheme for England and Wales had a record surplus at end-March 2025, with an estimated £150bn more than needed to pay promised pensions.
Altmann noted that the funding of social care mostly falls on local authorities, who have responsibility for arranging care for their local residents. Prime minister Andy Burnham has promised to address the social care crisis, and has asked Baroness Casey to recommend long-term solutions, but Altmann pointed out that she will not report before next year and money will need to be found to fund an improved system.
“Pensions could ride to the rescue for now, to help relieve so much family misery resulting from councils cutting care provision,” says Altmann.
“While many vulnerable, disabled or elderly residents are struggling to get the care they need from their local authority, councils are spending millions on pension contributions.”
Altmann also referred to Freedom of Information request responses from 254 of 317 councils showing that local authorities spent an average of 23.5 per cent of council tax revenue on pension contributions.
There have been previous calls for LGPS contributions to be redirected, including by Reform MP Richard Tice to consolidate the money into a £500bn sovereign wealth fund investing in assets such as British Steel.
On whether diverting LGPS money risks opening a ‘Pandora’s Box’ that cannot be easily reversed, Altmann says: “This move would just be unwinding the scale of contributions that taxpayers funded during the previous years. Over that time councils had to make massive cuts to services so now that can be rebalanced.
“I am suggesting that ploughing billions of pounds of taxpayer money into pension funds that have so much money already and don’t need more for the next few years is actually an irresponsible use of taxpayer funds when the country cannot afford basic services that councils need to provide.”
Altmann also noted that the monies could be diverted not just towards social care but other areas that may have received underfunding in recent years such as schools and charities.